Anything worth doing involves overcoming obstacles—sometimes they’re small and other times enormous. Sometimes they’re expected and other times they are complete curveballs. One way to help get past setbacks is to remember that they are coming. There’s a slide I use in a lot of presentations and talks that I give. On one side of the slide there’s a picture of a grassy mountain on a sunny day, and I show a line pointing near the top, to the word “me.” On the other side there’s a photo of a steep, dangerous mountain on a dark and stormy day, and I show a line pointing to the very bottom, where it also reads “me.”
This is how I describe to people what it feels like to be an entrepreneur. It’s also how it feels to be a leader of any team or any movement. Either you’re near the top of the mountain and it’s sunny and you’ve brought a picnic lunch, or you’re down at the bottom, with a stormbrewing, carrying a heavy pack, and you’re not sure you’ll ever get to the top. These two metaphorical days rotate all the time. You don’t miraculously get past all the punishing challenges and reach eternal sunshine every day after that. Rather, it’s a never-ending cycle of sunny to cloudy to sunny to cloudy, and hopefully back to sunny again.
The key to success is holding on to the belief that you’ll have more sunny days than cloudy ones and to just keep climbing, every day, no matter what. Great leaders not only keep climbing on both types of days but also inspire their teams to climb with them. The cloudy days and failures we face along the way, make us stronger and more prepared for each upcoming challenge. In my own experience as a startup founder, I learned in painful detail that failure is a necessary part of the process of building something.
In my own experience as a startup founder, I learned in painful detail that failure is a necessary part of the process of building something.
After nearly ten years moving up in the ranks at Yahoo!, I wanted to see if I could build a company from the ground up—a product that would solve an important user need, an outstanding team, and an inspiring company culture. I wanted to try my hand at being a founder and CEO. While I was excited for the challenge, I had my fair share of apprehension. I knew that the possibility of failure with startups was extremely high. In fact, I remember reading a statistic in The Book of Odds that said I was more likely to report seeing a UFO (one out of 5.8 U.S. adults) than for my startup company to succeed (depending on what source you use, between one out of seven and one out of ten).
But I jumped in anyway. I joined a very small existing company rather than starting completely from scratch. I chose a company with people I thought I could learn from with an incredible technical founder and an experienced board chair. And I did learn so much from them and many others over the next several years. I also learned how hard it is to be an entrepreneur, and boy did I make a lot of mistakes, especially at the beginning.
We had a vision of a world where people’s lives were rooted in their local neighborhoods, making their connections with their neighbors stronger and their lives more convenient. Although that vision was clear, it took numerous efforts to launch something that has what entrepreneurs and investors call “product/market fit.” This term means that you find a “good” (large and high-growth) market and have a product that can satisfy the needs of that market. We built three different products before ultimately finding one that had real product/market fit.
First up was Fatdoor, the neighborhood social networking product the team had built before I arrived. It had strong potential but was likely ahead of its time, as many tech products often are. When it was launched in 2007, it predated many of the foundational products upon which something like this would grow today, such as iPhone and Android apps, Facebook Connect (which allows people to log in to other sites with their Facebook credentials), and other tools. So although the market was potentially large (all people wanting to connect in all neighborhoods), we had trouble reaching enough people in that market, which meant we couldn’t effectively connect people locally. It also had some issues with user data privacy. So we shut it down.
Round 1: failure.
Based on the learning that we needed a better growth plan, we launched our second product: Center’d (horrible name, but that’s a story for another day). The first version of Center’d aimed to leverage what we built at Fatdoor, connecting people in neighborhoods, and focus on a specific community within those neighborhoods: schools and parents. The product helped them organize around work that needed to be shared and distributed, like event planning and volunteering, to help make their lives more convenient. It also had built-in virality, because each person who used the tool automatically pulled in more people. While the potential for a big market of people was there, a critical enough user need wasn’t clear, so it wasn’t a high-growth market. We ended up selling off the pieces of this to another small startup.
Round 2: failure.
After finding better virality but not a big enough problem to solve, in Center’d 2.0, we built on top of the location-based work we had done in the first two products to extend into local search. We believed that the world was going mobile, and when people looked for local businesses, they would want to quickly discover key attributes without reading hundreds of reviews on their smartphones. To build in that convenience, we analyzed more than 40 million online reviews for local businesses and used sentiment analysis and machine learning to come up with summaries for businesses, similar to a Zagat score, but in an automated way. We could tell you whether a restaurant was romantic or kid friendly. We could let you know the most commonly mentioned menu items and what people said about the service. It was a really good product, but we couldn’t get enough consumers to use it, and we had no real business model to make money to market it with because we couldn’t sell ads in it unless people used it. Chicken and egg. We did find a set of customers who were really interested in the data we had—other local directories and search companies—and they wanted to pay us for the data. So we sold it to them, and started making money. Awesome! Until we realized we had already sold it to most of the largest potential customers. Meaning that we didn’t have a sufficiently large market.
Round 3: better, but still likely a failure.
At each of these junctures, I could have called it quits. Many people might have. I often say in retrospect that the company failed three times, but we just didn’t go home.
I thought back to all the research I had done running local and marketplace businesses at Yahoo! and what people had told us they felt was missing. One of the consistent unmet needs we heard from people was that they wanted to know about sales and deals nearby. That was it, our eureka moment. We decided to build our fourth product—The Dealmap—which took all the robust data we had about local businesses and added a layer that showed which businesses were having a sale or special offer at the time. We launched The Dealmap right as the local deals ecosystem around Groupon was taking off, and because we were able to map both local, Groupon-style deals and sales from national brands (like Gap) to their local stores, we had a superior product. While any local deals service might have a dozen or so deals in each city on a given day, we would have thousands. And unlike its predecessors, The Dealmap tapped into consumers’ universal desire to save money. The product took off like wildfire after we launched it, acquiring millions of users in the first year. Companies like Mastercard and Microsoft reached out to work with us. It was a lightbulb moment for me in terms of what product/market fit actually looked like. Even though we were ultimately able to find success, what I’ve highlighted so far is just an inkling of the challenges we faced along the way. It was quite a tall mountain to climb. While there were many sunny days, there were also plenty of cloudy ones.
Even though we were ultimately able to find success, what I’ve highlighted so far is just an inkling of the challenges we faced along the way. It was quite a tall mountain to climb. While there were many sunny days, there were also plenty of cloudy ones.
In fact, even after we had a product that worked, in a market that was large, it didn’t mean there were no more obstacles. We were sued by patent trolls, had to navigate a board that was split between taking more funding and selling the company, and had to rescue our acquisition by Google after it nearly fell apart thirty-six hours before it was supposed to close.
At each of those moments I just thought to myself, “Okay, how can I take one more step up the mountain?” And one by one, we did solve each challenge. I negotiated additional agreements when necessary, and we changed the structure of the acquisition. We did what it took to make it work. Often the challenges themselves have value—they make us stronger, and each one makes us more capable of handling the next. So keep climbing the mountain, bring a team of people you want to climb with, and remember that you are not alone.
